1. Field of the Invention
The present invention relates generally to chargeback cost allocation, and in particular, to chargeback allocation based on a multi-level hierarchy of categorized cost attributes for grouped resources.
2. Background Information
Most organizations are becoming increasingly reliant on information technology (IT) product and services to manage their daily operations. The total cost of ownership (TCO), which includes the hardware and software purchase cost, management cost, etc., has significantly increased and forms one of the major portions of the total expenditure for organizations. Chief Information Officers (CIOs) have been struggling to justify the increased costs and at the same time fulfill the IT needs of their organizations. For businesses to be successful, these costs need to be carefully accounted for and attributed to specific processes or user groups/departments responsible for the consumption of IT resources. This process is called IT chargeback and although desirable, is hard to implement because of the increased consolidation of IT resources via technologies, such as virtualization. Current IT chargeback methods are either too complex or too adhoc, and often at times lead to unnecessary tensions between IT and business departments and fails to achieve the goal for which chargeback was implemented.
Implementing chargeback in IT systems gives rise to multiple technical challenges: First, the magnitude of complexity in providing IT services is mammoth as compared to generation and distribution of electricity. There are large numbers of resources that are shared in a complex fashion to provide useful service to the end-users. Second, these users can have different usage patterns and they may use resources with different levels and quality of services. Keeping track of end-to-end usage for every workload and every deployed resource can impose considerable monitoring overhead. Third, a significant portion of these resources may become idle depending on demand, time of day, etc. These idle resources, however, still incur some costs during the idle periods. Fourth, there are a large number of expenditures ranging from hardware/software purchase costs to enterprise-wide costs, such as rental, security, energy, cooling, etc. Asset costs may depreciate over their useful life. A major fraction of the total cost includes management and support costs. These costs are spread across an entire enterprise system and it's typically non-trivial to attribute them to one function or end-user. Finally, one cost allocation policy cannot fit all IT expenses and workloads, and the goals of every IT providers. Depending on the type and cost of a resource, there may be more than one policy that determines its allocation and these policies may use multiple metrics (such as usage, provisioning and performance data) to compute the final chargeback. Also, depending on whether the provider is delivering IT service to in-house customers or external clients, the goal of chargeback may be different. The former is more concerned about regulating IT resource usage and cost recovery. The latter's goal is to set a competitive price and increase profits.
Chargeback is often confused with IT service pricing, which determines how much customers (usually “external”) pay to the service providers such as SSP (Storage Service Provider) or ISP (Internet Service Provider). These pricing forms the part of Service Level Agreements (SLAs) and are associated with high level performance and quality attributes (such as maximum response time, minimum throughput, no single point of failure, etc.) that the service provider guarantees to deliver. Chargeback on the other hand is a process to distribute IT expenses that have already been incurred by the enterprise; it can be loosely compared to billing of utilities like electricity, which has been successfully implemented for many years. One of the reasons for that success is that there is a clear (and in most cases fair) relationship behind the usages and charges. A chargeback policy that allocates the cost equally among all the households in a community is hardly going to succeed. Similarly, chargeback for IT systems cannot distribute costs among its users in an adhoc manner.
FIGS. 1 and 2 show two common approaches employed by the current chargeback tools like ITUAM (IBM Tivoli Usage and Accounting Manager), HP Storage Essentials Chargeback, Northern Storage chargeback, Teamquest chargeback software, etc.
FIG. 1 illustrates the variable rate scheme 100. Variable rate scheme 100 computes the chargeback rate by dividing the total expenses with the total usage at the end of a billing period. The variable rate scheme 100 recovers total expenses, but variable rate can lead to surprise and customer dissatisfaction.
FIG. 2 illustrates a fixed rate scheme 200. Fixed rate schemes set rates based on historical usage. Customers are aware of what they would be charged for their usages but providers may face the risk of over-allocation and under-allocation. Existing chargeback tools perform cost allocation based on some linear formulation of the historical usages. These existing chargeback tools lack sophisticated cost allocation methods that can correlate end-to-end performance data from multiple sources and give an accurate breakdown of total cost by attributing different expenses with the appropriate users or departments. Cost allocation policies need to be manually specified for every resource and it is usually non-trivial to choose the right usage metric for allocating costs. Also, the linear cost assignment doesn't leave much room for the system administrators to regulate the usage and cost of their IT resources. These administrators typically want to be prepared for future demands and expenses, and have enough control to regulate the users' behavior. Current chargeback tools, however, fail to provide such support.